The paper takes a closer look at the impact of FDI on the U.S. economy. Included in the report is an analysis of the competitive advantages that make the United States an attractive destination for investors and trends in FDI by geography and industry sector.

Foreign direct investment is a prime source of capital, job creation, innovation, and cross-border trade. FDI has continued to flourish in the United States because firms worldwide recognize the United States as an innovative and stable market executed in the world’s largest economy. The United States offers an unmatched opportunity for success due to its renowned educational institutions, growing industry clusters, first-class research and development centers, protection for intellectual property rights, an entrepreneurial environment, access to global markets, a predictable regulatory climate, and increasingly competitive cost factors.

Key takeaways include:

The United States is both the largest recipient and source of FDI in the world. FDI has long been an integral part of our economy. In 2012, the total stock of direct investment in the United States was $2.7 trillion and FDI inflows totaled $160.1 billion.

FDI creates jobs: As of 2011, the most recent data available, majority-owned subsidiaries of multinational firms with U.S. operations employ more than 5.6 million workers and pay an average annual compensation of $77,600.

FDI contributes to U.S. innovation and helps drive exports: These firms also spent more than $45 billion in research and development here and accounted for 20.5 percent of U.S. goods exportedin 2011.

The five largest country sources of FDI in the United States are the United Kingdom, Japan, Germany, Canada, and France, according to the U.S. Bureau of Economic Analysis. The latest estimates of FDI stock by ultimate beneficial owner reveal that Together, these economies account for nearly 61.5 percent of total FDI stock. In addition, markets across Asia, Latin America, and Europe have substantially grown their FDI position in the United States in recent years.

The United States wins out in investment climate according to the June 2013 FDI Confidence Index, A.T. Kearney awarded the United States the top spot. The World Economic Forum’s (WEF) Global Competitiveness Index ranks the United States among the top ten economies based on strengths in innovation, education, and overall size of economy.